Cash Advance Bankruptcy

If you're considering filing for personal bankruptcy as a way to relieve overwhelming debt, you may be concerned about how certain debts are treated in bankruptcy court. Cash advance debt is a type of debt that worries many bankruptcy petitioners.

Many people struggling to make ends meet each month turn to cash advances and payday loans for temporary relief, only to find themselves deeper in debt and unable to repay these loans.

To speak with a bankruptcy lawyer about how your cash advance debt would be handled by the bankruptcy court, please fill out this form and arrange a free, no-obligation consultation today.

Cash Advances in Bankruptcy Cases

In order to determine whether a bankruptcy filing will be able to help you with your cash advance debt, it's important to understand how the bankruptcy court treats cash advances. One important factor is the type of bankruptcy you file:

Chapter 7 bankruptcy: In so-called "liquidation" bankruptcy, cash advance debts fall under the umbrella of unsecured debt (that is, debt not connected to any property) and so may be eligible for a complete discharge from the court. That is, if your cash advance debts meet certain criteria (see below), the court may be able to completely forgive that debt. If your cash advance debt is discharged in a Chapter 7 case, you will not be legally obligated to make any payments on it.

Chapter 13 bankruptcy: In what's also known as "reorganization" bankruptcy, cash advances are often assigned a low repayment priority. In Chapter 13 cases, filers repay their secured unsecured debts over a period of three to five years; in many instances, low-priority unsecured debts (which often include credit card debt, medical bills and cash advances) may be discharged at the end of the case.

Time Concerns for Cash Advances in Bankruptcy

The other important piece of the cash-advance-and-bankruptcy puzzle is the age and amount of your cash advance debts. Here's a look at some numbers.

Cash advances: Whether in the form of a payday loan or an advance on your credit card, cash advances must be more than 70 days old if they total $750 or more in order to be eligible for a bankruptcy discharge.

Credit purchases: Additionally, if you make credit card purchases of luxury goods totally more than $500 to any one creditor within 90 days of filing for bankruptcy, there's a good chance the court will not discharge the debt.

The reason these limits exist is to prevent the sort of fraudulent behavior that involves charging up a lot of non-essentials on a credit card or taking out a large cash advance that you don't intend to repay and filing for bankruptcy rather than repaying the debt.

Speak with a Bankruptcy Lawyer about Your Cash Advance Debt Today

Not sure whether your cash advance debts are eligible for discharge in the bankruptcy court? Then find out the specifics of your case by taking this opportunity to speak directly with a bankruptcy attorney practicing in your area.

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Laws may have changed since our last update. This is for informational purposes and is not legal advice. Speak to a local bankruptcy attorney for legal advice about your particular
situation.